Under what circumstances can a Crowne Plaza Participating Property assign its Participation Agreement?
Crowne_Plaza Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Assignment. Participating Property may not assign this Participation Agreement, nor any of its rights and/or obligations under it, nor purport to do so, nor hold any such rights in trust for any other person except to the extent required under Section 5, "Obligations", above.
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- Obligations. In the event of sale of the Participating Property to a third party, the seller of Participating Property shall take commercially reasonable efforts to ensure that the purchaser of the Participating Property understands and assumes the remaining term of this Participation Agreement, if any, for the Services that the Participating Property receives under Exhibit 1. In the event that the seller of the Participating Property fails to notify the purchaser or the purchaser does not agree to assume the remaining term of this Participation Agreement, if any, as a part of the sale of the Participating Property, the undersigned acknowledges and agrees to assume any and all charges and fees associated with early termination of this Participation Agreement as a result of the sale, which shall be no more than the prorated amount of fees remaining on the 36-month term of this Participation Agreement.
Source: Item 23 — Receipts (FDD pages 100–424)
What This Means (2025 FDD)
According to the 2025 Crowne Plaza Franchise Disclosure Document, a Participating Property generally cannot assign its Participation Agreement or any rights or obligations under it. The only exception to this rule is outlined in Section 5, "Obligations," which relates to the sale of the Participating Property.
Specifically, if the Participating Property is sold to a third party, the seller must make commercially reasonable efforts to ensure the purchaser understands and assumes the remaining term of the Participation Agreement. This means the seller has a responsibility to inform the buyer about the agreement and encourage them to take it over.
However, if the seller fails to notify the purchaser, or if the purchaser does not agree to assume the remaining term of the Participation Agreement, the original Participating Property acknowledges and agrees to assume any and all charges and fees associated with early termination of the Participation Agreement as a result of the sale. These early termination fees will not exceed the prorated amount of fees remaining on the 36-month term of the Participation Agreement. Therefore, while the agreement itself cannot be freely assigned, its obligations can be transferred to a new property owner under specific conditions related to the sale of the property.